More Charges Loom for FedEx

By Amos Maki

The U.S. Department of Justice could bring additional charges against FedEx Corp. for its role in shipping prescription medications from illegal online pharmacies, according to court records.

Federal prosecutors said in a document filed Friday, July 25, that they intend to present a “superseding indictment” against the shipping giant to a grand jury by Aug. 28.

Earlier this month a grand jury returned a 15-count indictment against Memphis-based FedEx alleging the company knowingly facilitated the distribution of prescription drugs from illegal online pharmacies. Later indictments brought in a criminal case typically are referred to as “superseding” indictments.

FedEx is scheduled to make its initial appearance in U.S. District Court in San Francisco Tuesday, July 29. FedEx could face $1.6 billion in penalties on felony charges that it conspired with illegal online pharmacies to deliver prescription drugs to customers it knew lacked valid prescriptions.

The indictment says FedEx knew for a decade that illegal Web-based pharmacies used their services and that the parcel delivery company took steps to protect its business by setting up special policies for Internet pharmacies to minimize financial losses if law enforcement shut the sites down.

The charges against FedEx involve deliveries between 2000 and 2010 of medications – including Ambien, Xanax and Valium – from pharmacies that required their customers only to fill out an online form, without any need for a doctor’s examination or prescription.

According to the indictment, FedEx knew as early as 2004 that it was delivering drugs to dealers and addicts. FedEx’s couriers in Kentucky, Tennessee, and Virginia expressed safety concerns that were circulated to senior management at the company, including that FedEx trucks were stopped on the road by online pharmacy customers demanding packages of pills and that delivery addresses included a parking lot, school or vacant home where several car loads of people were waiting for the FedEx driver to arrive with their drugs.

High-level FedEx officials learned of the government crackdown on Internet pharmacies, which negatively affected the company’s revenue when the pharmacies were shut down, but continued to deliver the drugs after crafting policies that protected the company’s bottom line, according to the indictment.

“The advent of Internet pharmacies allowed the cheap and easy distribution of massive amounts of illegal prescription drugs to every corner of the United States, while allowing perpetrators to conceal their identities through the anonymity the Internet provides,” said U.S. Attorney Melinda Haag in a statement. “This indictment highlights the importance of holding corporations that knowingly enable illegal activity responsible for their role in aiding criminal behavior.”

The indictment against FedEx was the result of a multi-year investigation by the Drug Enforcement Administration and prosecutors in Northern California into the black market for prescription medications.

Last year, UPS reached an agreement with the U.S. Justice Department to forfeit $40 million in sales for serving online pharmacies. In 2011, Google Inc. agreed to pay $500 million to settle allegations by the Justice Department that it profited from ads purchased by online pharmacies that the search company knew were improperly selling prescription drugs.

FedEx has vowed to fight the charges, saying the government was unfairly assigning law enforcement responsibilities to a company that delivers more than 10 million packages a day.

“We want to be clear what’s at stake here: the government is suggesting that FedEx assumes criminal responsibility for the legality of the contents of the millions of packages that we pick up and deliver every day,” FedEx said in a statement. “We are a transportation company – we are not law enforcement.”